October 31, 2014
Clubbing in Paris
With the Brazil 2014 soccer World Cup nearing, it’s tempting to use sporting metaphors to describe everything that happens with Argentina’s complex politics. Thus the first try at renegotiating the country’s debt with the Paris Club of creditor nations by Economy Minister Axel Kicillof in mid-January was presented as an own goal by his critics because little progress was made. And now that a repayment deal with the Paris Club over an outstanding debt of 9.7 billion dollars has been formally announced, after Kicillof and his team held marathon negotiations on Wednesday in France, the national government feels like it has the right to celebrate it as if it had won a league title (especially because technically there will be no International Monetary Fund involvement). It really is neither one thing nor the other. The accord should serve to realize that nothing is gained by oversimplifying the news for the sake of short-term gain. Public opinion deserves deeper analysis. But try explaining that to the infantile rival factions at odds in this polarized nation, which is heading for a presidential election next year.
Perhaps a real surprise is that an agreement has been inked so swiftly when the negotiations, with a club that includes 19 nations, were expected to be “torturous.” Kicillof has clinched this accord at a time rumours had been swirling about a confrontation with Juan Carlos Fábrega, the Central Bank governor, over the decision to increase interest rates to battle inflation. It was probably absolute chance that while Kicillof was negotiating in Paris, Fábrega was addressing a forum back in Buenos Aires on Wednesday to explain that the administration of President Cristina Fernández de Kirchner had consciously decided in January to devalue the peso by approximately 20 percent practically overnight. Yet had Kicillof and his jet-lagged negotiators failed to reach an agreement, as the talks dragged on into the nocturnal hours when most of those awake in the French capital are nightclubbers and not attending to Paris Club business, no doubt there would have been rife speculation about Fábrega trying to upstage the minister.
Fernández de Kirchner reshuffled her Cabinet in November after the ruling Victory Front coalition lost the midterm elections in all the major districts last year. Kicillof and Fábrega were appointed as part of a major reshuffle to deal with a major electoral defeat. Wednesday’s developments at home and in Paris, involving the Economy minister and Central Bank governor, could mean that this recently-appointed economic team will go the distance.